AMP turns advice strategy into new super product

AMP Limited has launched a new superannuation product which leverages off the Centrelink concession rules to help members access more entitlements and greater retirement income.

The company is claiming that the new product, AMP Super Lifetime, can boost income by more than $100,000 in the first 10 years of retirement without members changing how their superannuation is invested and without additional fees.

The strategy will be familiar to financial advisers, but up to now has not been packaged as a product. It will be initially available to members under the age of 58 and who have not met a full condition of release in their account.

The product is designed around the Centrelink concession rules and the ability to reduce the amount of super counted in the age pension assets test – “potentially increasing entitlements and retirement income by more than $100,000 in the first 10 years of retirement”.

AMP is marketing the product with the message that the younger Australians take advantage of the feature, the greater their potential income increase in retirement will be.

AMP Group Executive, Superannuation and Investments, Melinda Howes described the product as a breakthrough innovation for the superannuation industry – “a simple, no-cost feature that can significantly increase retirement income and improve access to the Age Pension”.

“It’s designed to quietly work in the background, using Government rules to unlock more income when it matters most,” she said.

AMP’s description of how the product works is as follows:

▪ Once activated, AMP Super Lifetime runs automatically in the background of a member’s super account, creating a ‘concessional’ balance. Members incur no additional fees, and the member’s actual super balance is unaffected.

▪ This ‘concessional’ balance uses the deeming rate as its growth rate, instead of the actual return of the super fund. This deeming rate is currently 2.25% and is set by the Government.

▪ Over time, this is expected to create a ‘concessional’ balance that is lower than the member’s actual super balance. This ‘concessional’ balance is referred to by the Government as the Purchase Price.

▪ At retirement, the member can choose to move some of their super into an AMP Lifetime Pension account, designed to provide income for life and to work alongside the AMP Super Allocated Pension.

▪ When Centrelink assesses the member’s eligibility for the age pension, it uses the lower ‘concessional’ balance for the portion invested in the AMP Lifetime Pension, instead of the member’s actual super balance. This may help the member qualify for more Age Pension, boosting their income in retirement.

▪ With increased certainty and financial confidence, many retirees may in turn choose to draw a higher income from their AMP Allocated Pension, further boosting income and improving quality of life in their earlier active retirement years.

AMP said eligible AMP Super Choice members have had the feature automatically added to their account, while eligible MySuper members have the option to add the feature.